Business Finance Options for Startup Businesses

Successful business leaders suggest that you don’t have to put all eggs in a single basket. This is a business strategy you must understand and is especially vital to your finances. If you do so, it will give you a better start-up and a chance to improve on getting appropriate financing for your needs.

Bankers know that they aren’t the sole source of funds. And therefore, using various types of alternatives can mean that you’re a proactive business entrepreneur.

Business Finance Options

With numerous options of getting money for business, it’s a good advantage for you. This is because you can choose one suitable for your needs.

Moreover, not all business startup financial sources are reliable but you can succeed in marketing by utilizing social media platforms such as Twitter as well as third-party social media platforms that for instance help you increase the number of Twitter followers.

Let’s look at some of these financial sources. You can have time to think and pick the best option.

1. Love Money

If you have a spouse, they can decide to help with your startup business. When such an individual loans you money, it’s called love money.

It doesn’t have to be your spouse. Your parents, friends, siblings, and even friends fall in this category. Investors would prefer this source of finances because it’s “patient capital.” You have to pay the money later after your business has started to make a profit.

Before you can borrow love money, there are things to keep in mind. Some of these things include:

  • Never take a business relationship with friends and family lightly
  • Friends and family may want to have equity from your business
  • Friends and family will rarely have much capital.

Therefore, you have to be careful before you can approach such people for support.

2. Personal Investment

The other source of capital for a startup business is a personal investment. If you fund your business with your investment, it proves you’re having a long-term commitment and ready to take risks.

Personal investment refers to your cash or collateral from your assets.The increase of Twitter followers we have talked about above can be one of the examples. Personal investment can go into marketing as well.

3. Venture Capital

The other financial option to find your startup business is through venture capital. Keep in mind that it isn’t something for all entrepreneurs. From the start, remember that venture capitalist only focuses on technology-driven types of businesses or companies to fund. Moreover, these businesses have to be in high growth potential sectors like communications, biotechnology, and information technology.

The good thing about venture capitalists is that they take an equity position in your business to carry out a higher-risk project. It involves providing them with equity or some ownership of your business.

Additionally, venture capitalists expect to get healthy returns from their investments. This will be generated after your business has started to sell its shares to the public.

If you choose this option for your business startup, be sure you’re looking for investors who can bring relevant knowledge and experience to your business.

You need to choose the best venture capital provider. A good one should focus on your major interventions when you need a huge amount of funds to establish your business in the market.

4. Business Incubators

Another startup finding option is business incubators. These are also referred to as accelerators. Business incubators try to focus on high-tech sectors where they provide them with support at different stages of business development.

However, some local economic development incubators focus on some areas such as revitalization, job creation, and sharing services. Other incubators can invite your future business to share their premises, administrative, technical resources, and logistics. Perhaps, your company wants to test some of your products. Therefore, a business incubator can allow you to use its laboratory for such services to help you test your products cheaply.

An incubation phase lasts long and can even go up to years. After your product is ready, it leaves incubation premises and enters into the industrial production phase.

5. Angels

These are wealthy people and particularly retired company executives. These individuals are interested in investing in small firms.

Angels are not only money lenders to these companies. They also provide a network of contacts and experience. These investors tend to offer support at the early stages of business. Individuals can provide amounts ranging between $25,000 to $100,000. But institutional venture capitalists, on the other hand, provide a larger investment above $100,000.

Angels risk their money. So, they have the right to supervise the management of the company and its practices. In other words, it involves having a seat as the board of directors and transparency.

Moreover, angels keep a low profile in the company. For you to meet them, you need to search websites on angels or contact specialized associates.

6. Government Grants & Subsidies

Today, governments are helping citizens to establish their businesses. Therefore, you can approach government agencies that provide you with grants and subsidies available to your business. Sometimes, getting these grants is challenging. That’s because of the strong competition and how they are awarded. You are also allowed to provide some information to get

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